India exchange lures retail investors to fight new rival

NSE will trade volatility...

Increased activity by retail investors will help “counter inflows and outflows” from overseas funds and lower volatility, said the finance ministry’s Mathew. Inflows from abroad climbed to a record in 2010, making the Sensex the best performer among the world’s 10 biggest markets that year. The gauge had its second-worst annual loss in 2011 after funds withdrew $512 million, according to data compiled by Bloomberg.

Futures on the India VIX will allow investors to bet on or guard against swings in the Nifty index, Manoj Murlidharan Vayalar, a derivatives analyst at IIFL PReMIA in Mumbai, said in a phone interview.

“It will be an additional hedging tool to manage risk in their portfolio,” he said.

The India VIX added 3.5 percent to 15.3 at the 3:30 p.m. close, after sinking to a record intraday low on Sept. 7. The Nifty added 0.1 percent to 5,363.45, climbing for a fourth day.

MCX Commodity Exchange, which owns 5 percent of MCX-SX, in March became the first Indian exchange to sell shares. The sale was oversubscribed 54 times as investors bet the bourse will benefit from growing trade in gold, metals and farm contracts.

MCX accounted for 82 percent of the 44 trillion rupees of commodity futures traded in the March quarter, according to data from the industry regulator.